On April 5, 2022

The Importance of Account Reconciliations

Though an essential part of reporting and the financial close, account reconciliations can be considered a secondary function. The truth of the matter is that organizations need better internal controls and quicker identification and reporting of weaknesses in the data required for accurate financial processes.

The Challenges of Reconciliations

Without account reconciliations, the accuracy and completeness of financial statements can be in question. When performed correctly, account reconciliations lower the risk of financial restatements and the possibility of external audits. If account reconciliations are not treated as critical to the close process, organizations are vulnerable to facing many challenges.

One challenge is that different legacy GL/ERP systems can create several reconciliation points and risk areas. If the organization depends on the manual input to Excel worksheets, you run the risk of human error. Business unit account reconciliations may not align with corporate processes. It can cause a poor execution of workflow control between the preparer, reviewer, final approver, and peer review.

Additional issues could include no built-in checks to ensure validation or automation to approve zero-balance accounts quickly. Finally, it can cause ledgers to be open past the end of the period.

Overcoming These Obstacles

CPM software provides a purpose-built account reconciliation solution that often comes as separate applications. While this approach is viable, it has the pitfall of requiring data movement, resulting in the potential for gaps in the process. Finding a unified approach to account reconciliations offers many advantages, including complete insight into required activities and processes, the better quality of reporting, less effort in monitoring compliance initiatives and end-to-end control with collaborative and workflow-driven processes.

At Strategic iQ, we help our clients to transform their business operations with proven project management methodologies, effective management techniques, and the expertise to streamline all of your company’s operations to bring your actionable goals to fruition. Our solutions are tailor-made for all CFOs, as we leverage our combined industry experience, deep knowledge, and technical expertise. Don’t hesitate to contact us; we look forward to speaking with you to learn how we can help you be even more successful in 2021.

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